Option traders are collecting big gains on downside positions in Affirm Holdings Inc (AFRM) today.
On Mar. 7, Market Rebellion’s Unusual Option Activity Service found that 3,700 Weekly $13.50 puts, expiring tomorrow, were bought for $0.77 to $0.80 as part of a bearish roll with shares at $13.21. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 662.
Those puts have traded up to $3.39 so far this session, over 4 times their purchase prices. The stock declined 23.24% in the same time period, a large move but nowhere near that of its options on a relative basis.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.
AFRM was last down 8.53% at $10.34.
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